Problem
There is a bug in Magento that prevents Zip+4 tax codes from accurately being calculated. If a customer enters their zip code during Magento checkout in the Zip+4 format (XXXXX-XXXX) or makes a typo during entry, i.e. includes an extra or non-digit character, any applicable taxes are not calculated by Magento. This causes headaches for orders where tax should have been collected: following up with customers, running additional charges, and keeping track of these manual tax collections is an inconvenience for business owners and customers alike.

Since the solution to this problem is not well-documented by the Magento community, we have posted it below for others to refer to. Plus note that the instructions are for Magento 1.7.x (see the bottom of the post for info about applying this fix in Magento 1.4.x):

I must be doing something wrong because I can’t get this to work in 1.7. It’s really straight forward but when I am in the shopping cart area and put in an zip+4 into the estimate shipping and tax area this does not work.